C.H. Robinson, Ryder Report Lower Earnings

Two more freight companies — C.H. Robinson Worldwide Inc. and Ryder System Inc. — have reported weaker third-quarter results, following a trend established in last week’s earnings reports.

Weaker profit margins in its truckload business drove down C.H. Robinson's third-quarter net income by 7.5% to $129 million, or 90 cents per share. Net income at Ryder declined 6% to $84.8 million, or $1.59 per share, as the leasing specialist was hit by weak rental market activity and deterioration in used-vehicle sales.

Companies including J.B. Hunt Transport Services, Landstar, Werner Enterprises and Covenant Transportation Group previously announced that third-quarter profit trailed the 2015 period.

Minnesota-based C.H. Robinson, ranked No. 4 on the Transport Topics Top 50 list of the largest logistics companies in North America, experienced a 1.9% revenue decline to $3.36 billion. However, net revenue, or the amount left over after paying transport costs, fell faster at 5.1% to $558.5 million.

“We expected a challenging pricing environment in 2016 as shippers focus on reducing their transportation costs,” C.H. Robinson CEO John Wiehoff said. “We are adapting to the market conditions by achieving profitable volume growth and continuing to focus on improving our customers’ supply chain outcomes.”

Truckload freight, which represents about 60% of business, rose 7.5% in the quarter, but net revenue fell 10%. As a result, margins deteriorated by about 2 percentage points, excluding fuel surcharge effects. The decline was 5.5% on a per-mile basis in rates and 3.5% less in transport costs.

The less-than-truckload sector fared better, with 2.4% higher net revenue, reflecting 4.5% higher volume and a slight drop in margins.

Margins declined on the intermodal, ocean and air business at C.H. Robinson. Other services such as customs, warehousing and sourcing generated improved profitability.

The impact from Ryder’s weak rental and used-vehicle markets was cushioned somewhat by sharply improved results in the dedicated trucking business and higher profit in the Supply Chain Solutions logistics unit. Revenue rose 3% to $1.72 billion.

Ryder also shaved 20 cents per share from its earnings forecast for 2016 to a range of $5.29 to $5.44, citing depressed conditions in its largest market, linking the change to the weak used-vehicle sales market.

The leasing unit’s third-quarter profit fell 11% to $112.3 million. Revenue was little changed at $1.16 billion. Dedicated unit profit before taxes was 32% higher at $17.6 million, outpacing the 15% rise in revenue to $260.9 million. The logistics unit’s profitability rose 16% to $31 million as revenue increased 3% to $416.9 million.

“We're pleased that we performed in line with our third-quarter forecast, despite a very challenging transactional rental and used vehicle sales market,” Ryder CEO Robert Sanchez said in a statement. “Used-vehicle sales volumes were lower than anticipated. Our core contractual offerings — full-service lease, dedicated transportation and supply chain solutions — all demonstrated strong revenue growth of 7% or above in the quarter."

Rental business revenue fell 14%.

Growth in the dedicated unit was helped by converting lease customers to the dedicated unit, Sanchez said on a conference call.

Ryder Supply Chain Solutions ranks No. 13 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.